Grosvenor casino owner cuts staff after Reeves gambling tax blow
Grosvenor casino owner Rank Group was forced to trim its headcount in a bid to cut costs, as the company continues to deal with the fallout of Rachel Reeves hiking online gambling tax.
The Chancellor’s decision to increase Remote Gaming Duty (RGD) rate from 21 per cent to 40 per cent in the last Autumn Budget, left the group scrambling to absorb the blow and protect revenue after it came into effect in April.
The firm opted to slash marketing spend and supplier costs as well as make “headcount reductions” to mitigate spend and “the impact of the RGD increase”.
It opted to maintain targeted digital ads and customer incentives, such as bonuses and loyalty rewards, to keep people returning to digital gambling despite the increased levy.
But chief executive Richard Harris, who was appointed the permanent boss of the casino group earlier this week, admitted the hike had caused “significant cost and taxation headwinds”.
Shares climbed 8.3 per cent in early trading to 102.3p, with the stock up 5.2 per cent since January.
Settling regulatory troubles
The Maidenhead-headquartered group also confirmed submitting a regulatory settlement proposal to the Gambling Commission, as it looked to avoid paying a financial penalty.
The FTSE 250 group offered to pay the gambling watchdog £5m, after the body conducted an investigation into the Grosvenors casino licence and found evidence of rule breaking.
The watchdog confirmed it was “minded to accept the settlement proposal” and awaits the official paperwork to do so. The payment is set to be recorded as a separately disclosed item in an attempt to prevent profit being distorted.
Revenue streams
This decision to keep targeted ads in place, led like-for-like digital net gaming revenue (NGR) to grow 12 per cent in the final quarter to £63.9m.
Grosvenor venues also recorded a three per cent rise in NGR to £98.3m, despite the “disruption to international travel” caused by the conflict in the Middle East, bolstered by gaming machine performance.
Mecca Bingo halls saw NGR reach £35.4m, while its Enracha venues reported NGR reaching £11.3m.